8-KOther Events

FIRSTENERGY CORP 8-K Report, Corporate Update (Feb 2, 2021)

Filed February 2, 2021For Securities:FE

Summary

FirstEnergy Corp. (FE) announced on February 2, 2021, a settlement with the Ohio Attorney General (OAG) and the Cities of Cincinnati and Columbus concerning the collection of revenue under decoupling riders permitted by Ohio House Bill 6 (HB 6). As part of the settlement, FirstEnergy's Ohio utilities will apply to set these decoupling riders to zero with the Public Utilities Commission of Ohio (PUCO). This action aims to address the temporary restraining order and preliminary injunction request by the OAG. The company anticipates setting the remaining regulatory asset balance related to these riders, approximately $110 million, to zero. While FirstEnergy estimates it would have collected $85 million in lost distribution revenue for 2020 without these riders, there is no assurance that the PUCO will allow recovery of these amounts in future proceedings.

Key Highlights

  • 1FirstEnergy has reached a settlement with the Ohio Attorney General and key cities regarding HB 6 decoupling riders.
  • 2The settlement involves setting decoupling riders (Rider CSR) to zero for FirstEnergy's Ohio utilities.
  • 3FirstEnergy expects to write off approximately $110 million in regulatory asset balances related to these riders.
  • 4The company estimates it would have collected $85 million in lost distribution revenue for 2020 in the absence of these riders.
  • 5There is no guarantee that the PUCO will approve recovery of the estimated lost distribution revenue in future proceedings.
  • 6The consolidated civil cases related to HB 6 will be stayed until the resolution of the HB 6 Criminal Proceedings.
  • 7Cities of Dayton and Toledo will be added as parties to the consolidated civil lawsuits.

Frequently Asked Questions

The settlement involves FirstEnergy setting its HB 6 decoupling riders to zero, eliminating future collections of these specific charges from customers. The company expects to write off an approximately $110 million regulatory asset balance associated with these riders. While they estimate $85 million in lost distribution revenue for 2020 without these riders, recovery is not assured.

FirstEnergy has settled with the Ohio Attorney General and the Cities of Cincinnati and Columbus concerning the immediate request for a temporary restraining order and preliminary injunction. The broader consolidated civil cases will be stayed (paused) until the federal criminal proceedings related to HB 6 are fully resolved. Additionally, the cities of Dayton and Toledo will be added as plaintiffs in the consolidated civil cases.

FirstEnergy continues to evaluate its approach to seeking recovery of lost distribution revenue. The company estimates it would have collected $85 million for 2020 without the decoupling riders. However, the filing explicitly states there is no assurance that the Public Utilities Commission of Ohio (PUCO) will authorize the recovery of these lost revenues in future proceedings.

Decoupling riders are mechanisms that allow utility companies to adjust rates to recover specific amounts of revenue, often intended to reconcile differences between actual and authorized revenue. In this case, the decoupling riders under HB 6 were a source of revenue for FirstEnergy's Ohio utilities that is now being set to zero as part of the settlement. The legal challenges and subsequent settlement highlight the controversy and uncertainty surrounding these revenue streams following the HB 6 scandal.